Why Vertical Integration of Sequencers Stifles Innovation

A single sequencer monopolizes MEV and transaction ordering, siphoning value from users and builders back to the foundation. This creates a rent-seeking model that mirrors the very problems L2s were meant to solve.

• MEV revenue is captured internally, not redistributed.
• Fee markets are opaque and controlled by a single entity.
• Protocol revenue is centralized, limiting community alignment.

Vertical integration creates a closed ecosystem where the core team dictates infrastructure. This kills competition for block building, data availability, and proving, freezing the tech stack.

• No permissionless innovation for alternative sequencer clients or prover networks.
• Protocol upgrades are gated by a single entity's roadmap.
• Builder ecosystem is neutered, preventing projects like Flashbots SUAVE or EigenLayer from integrating natively.

A single sequencer is a liveness and censorship bottleneck. If it goes offline, the chain halts. If it censors, users have no recourse. This reintroduces the trusted third-party risk that decentralization aims to eliminate.

• Chain liveness depends on one operator's infra.
• Censorship resistance is theoretical, not enforced.
• Security model regresses to the team's reputation, not cryptographic guarantees.

The answer is a permissionless set of sequencers, similar to Ethereum's validator set, that orders transactions via consensus. This separates infrastructure from application logic, enabling true credibly neutral execution.

• MEV is redistributed or burned, realigning incentives.
• Liveness is guaranteed by a decentralized set of operators.
• Innovation flourishes as builders compete on client optimization and service quality.

Decoupling transaction ordering from execution unlocks new architectures. Users express desired outcomes (intents) fulfilled by a competitive network of solvers, as seen in UniswapX and CowSwap. Shared sequencers like Astria or Espresso provide cross-rollup atomic composability.

• User experience shifts from specifying transactions to declaring goals.
• Cross-rollup liquidity becomes atomic and seamless.
• Solver networks compete on efficiency, driving down costs.

Rollups should own their sequencing logic as a sovereign component, pluggable into different decentralized sequencer networks or shared sequencers. This mirrors the Celestia and EigenDA thesis for data availability: specialize, then outsource to the best-in-class decentralized network.

• Sovereign choice of sequencer set, prover network, and DA layer.
• Best-in-class modules compete on performance and cost.
• Ecosystem alignment shifts from platform loyalty to modular utility.

Arbitrum's sequencer is a vertically integrated, exclusive service. This creates a single point of failure and bottlenecks innovation.

• Monopoly Pricing: No competition for L2 transaction ordering means users pay what the single provider sets.
• Innovation Stagnation: No external sequencers can propose novel features like intent-based batching or pre-confirmations.
• Centralized Risk: The entire network's liveness depends on Offchain Labs' infrastructure.

The Optimism Superchain is building a shared sequencer set for all OP Chains. This modular approach separates execution from sequencing.

• Interoperability First: Native cross-chain atomic composability becomes possible, akin to layerzero but at the sequencer level.
• Economic Competition: Multiple sequencers can bid for the right to order transactions, driving down costs.
• Credible Neutrality: No single app-chain can be censored or favored by a vertically integrated operator.

Espresso is building a decentralized sequencer network that any rollup can plug into, creating a liquid marketplace for block space.

• MEV Redistribution: A proposer-builder-separator (PBS) model allows MEV revenue to be shared with the rollup and its users.
• TimeBoost Auctions: Rollups can auction off the right to sequence high-priority blocks, optimizing for latency and revenue.
• Shared Security: Leverages EigenLayer for cryptoeconomic security, separating trust from a single entity's hardware.

Projects like Astria (shared sequencer) and Rome (rollup-as-a-service) treat sequencing as a commoditized execution layer.

• Developer Sovereignty: Rollup builders retain sovereignty over execution and settlement while outsourcing sequencing.
• Instant Composability: A shared sequencer network enables fast, trust-minimized communication between rollups.
• Rapid Iteration: New sequencing techniques (e.g., for intent-based protocols like UniswapX) can be deployed without forking the entire stack.

Vertically integrated sequencers capture all MEV and transaction fees, creating a single point of value extraction. This starves application-layer innovation and forces builders to subsidize the infrastructure monopoly.

• MEV capture is opaque and non-competitive.
• Fee markets are dictated, not discovered.
• Result: ~$100M+ in annual sequencer revenue remains trapped, unavailable for redistribution to users or dApps.

A monolithic sequencer acts as a gatekeeper for cross-chain communication. It dictates integration timelines, fees, and security models for bridges like LayerZero and Axelar, creating artificial bottlenecks.

• Slow integrations for new chains or L2s.
• Vendor lock-in for shared sequencer sets.
• Result: Delays in launching native omnichain apps, stifling composability that drives DeFi TVL.

A bundled sequencer enforces a one-size-fits-all execution environment. It prevents experimentation with novel pre-confirmations, intent-based architectures (like UniswapX or CowSwap), or application-specific sequencing logic.

• No custom pre-confirmations for DEXs or games.
• Blocked intent pathways that bypass the central sequencer.
• Result: The ecosystem is limited to the infrastructure provider's roadmap, not market-driven innovation.

Decoupling sequencing (Espresso, Astria) from execution is the architectural fix. Shared sequencers create a neutral, competitive marketplace for block building, enabling rollups to outsource sequencing while retaining sovereignty.

• MEV redistribution becomes possible via auctions.
• Atomic cross-rollup composability unlocks new app designs.
• Result: Infrastructure becomes a commodity, value accrues to applications and users.